Forexpros – The U.S. dollar ended the week slightly lower against its Canadian counterpart on Friday, as signs of new steps to tackle the sovereign debt crisis in the euro zone supported demand for riskier assets.
USD/CAD hit 1.0265 on Thursday, the pair’s highest since October 18; the pair subsequently consolidated at 1.0102 by close of trade on Friday, shedding 0.60% over the week.
The pair is likely to find support at 0.9972, the low of November 2 and resistance at 1.0265, the high of November 10.
The greenback surged 1.55% against the Canadian dollar on Wednesday as yields on 10-year Italian bonds rose above the 7% threshold, a level widely considered unsustainable for continued borrowing.
But risk sentiment improved on Friday, sending the U.S. dollar broadly lower after Italy’s Parliament approved an amendment to the country’s 2012 budget, paving the way for the resignation of Prime Minister Silvio Berlusconi on Saturday.
In Greece, incoming Prime Minister Lucas Papademos and his cabinet were sworn in. Papademos will implement the country’s latest EUR130 billion bailout before leading the country to early elections.
Elsewhere, preliminary data showing that consumer sentiment rose to its highest level in five months this month contributed to stronger risk appetite.
The University of Michigan’s consumer sentiment index rose to a seasonally adjusted 64.2, from 60.9 in October, outstripping forecasts for an increase to 61.0.
Meanwhile, data showed that Canada posted an unexpected trade surplus of CAD1.2 billion in September, on the back of a decline in imports and a strong rise in exports.
The loonie also found support crude oil futures rallied to a 15-week high on Friday.
On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD99.17 a barrel by close of trade on Friday, rallying 4.8% over the week.
Raw materials, including oil account for about half of Canada’s export revenue.
In the week ahead, investors will continue to closely monitor developments in the euro zone as talks on the formation of an emergency government in Italy get started.
Also next week, the U.S. is to release data on retail sales, housing and inflation, while Bank of Canada Governor Mark Carney is due to speak.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, November 14
BOC Governor Mark Carney is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy.
Tuesday, November 15
Canada is to produce government data on manufacturing sales, a leading indicator of economic health.
Also Tuesday, the U.S. is to produce a flurry of economic data with reports on retail sales, producer price inflation, business inventories and a report on manufacturing activity in New York State.
Wednesday, November 16
The U.S. is to publish data on consumer inflation, as well as data on industrial production, the capacity utilization rate, the balance of foreign and domestic investment in long-term securities and crude oil stockpiles. This last data can be a big market mover for the loonie due to the size of Canada’s energy sector.
Thursday, November 17
Canada is to publish official data on foreign securities purchases.
Also Thursday, the U.S. is to publish its weekly report on initial jobless claims, as well as data on building permits, an excellent gauge of future construction activity and housing starts. The country is also to release a report on manufacturing activity in Philadelphia, a leading indicator of economic health.
Friday, November 18
Canada is to publish official data on consumer price inflation, as well as an index of leading economic indicators, designed to predict the future direction of the economy.
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